Banking and Finance

"The whole idea of a bank that is 82% owned by the taxpayer but run at arm's length from government is a nonsense...", says Mervyn King, governor of the Bank of England. King's answer is that the 82%-owned Royal Bank of Scotland should be broken up. The profit-making bits of it would be privatised, and the loss-making bits retained by the government and run down. The Government is reluctant because doing that would mean open and definitively registering the losses the Government has made on the RBS shares it bought in the crisis of 2008. The operation was always more like "compensation without...

Fiddling around with ring-fences isn't enough. To organise investment for social benefit; to redress inequality; to give any reforming government the means it needs to fend off the pressure of global financial markets - there is no alternative but to expropriate the banks and high finance. They should be converted into a public banking, mortgage, and pension service, under public ownership and democratic and workers' control. The last five or six years have indicted the banks. Even the conservative Financial Times columnist Martin Wolf admits, though without drawing full conclusions, that:...

Five years ago, the demand for the public ownership of the banks was the preserve of a small minority of socialists. Today it follows logically from the exposed venality of the banking system. There have now been three waves of banking failure in the recent past. Socialists should use these events to argue relentlessly for state ownership and democratic control of the banking system. First the advent of neoliberalism from the 1970s was premised on the renewed role of finance capital. Finance capital became in Lenin’s words “the typical ruler of the world”. It was “a power that is peculiarly...

“Companies are sitting on huge cash reserves”, reports a writer in the Financial Times (3 October). “In the US, for example, companies had $1,200bn (€880bn) stashed away in cash and short-term liquid investments at the end of last year”. The banks, bailed out by governments in 2008, are sitting on even huger cash piles. Central banks anxiously stuff more and more cash into the commercial banks, hoping that this will ease up credit and stop a new sharp economic downturn. And yet global capitalism is on the brink of a new crash, and set for a long period of economic depression and high...

By Michel Husson The crisis has taught us a lesson: “neoliberal Europe” was a badly-conceived thing, which has become more and more rickety over the years and appears to be incapable of standing up to the “stress test” of crisis. Right now, there are only two ways out: either everyone is going to take their marbles home and quit; or the whole edifice will have to be rebuilt, from top to bottom. But sticking plasters are being stuck over sticking plasters. How things turn out in Greece will serve as a barometer for this whole stop-starting process: everyone knows that Greece won’t be able to...

In 2010 veteran Canadian socialist Leo Panitch argued for a bolder response by the left to the financial crisis. For more on the banking and financial sector, see here . A common response of the left to the financial crisis that broke out in the USA in 2007-08 was often a kind of Michael Moore-type populist one: Why are you bailing the banks out? Let them go under. This kind of response was, of course, utterly irresponsible, with no thought given to what would happen to the savings of workers, let alone to the paychecks deposited into their bank accounts, or even to the fact that what was at...

“After the financial crisis”, in 2008, noted John Authers in the Financial Times of 16 July, “it was beyond argument that existing regulations had failed, and would need to be rethought. “Only a few months ago, it looked as though the Great Re-regulation might turn into a Great Revenge, as politicians planned to squeeze the banks”. In the last few months, inertia, the huge political and social power of high finance, the absence of an energetic lobby-group within the wider capitalist class for a definite scheme of “re-regulation”, and the leanings of most political leaders, have won out. The...

Q. Are cuts in public services, welfare benefits, and public sector pay, jobs, and pensions unavoidable? Click here to download this article as pdf. A. No. In the first place, there is nothing impossible about the government continuing with a large budget deficit for a while. In the second place, the Trident replacement (maybe £30 billion) could be cut. Military spending (total £37 billion a year) could be reduced. The vast administrative costs of the internal market in the health service and the payments to private contractors under PFI schemes (up to £10 billion a year) could be axed. In the...

The Tory shadow Chancellor George Osborne must think he pulled off a coup on Monday 15 March. He got Jeffrey Sachs - a real economist, an architect of Russia's "shock treatment" after 1991, but who has since distanced himself from extreme free-marketism - to co-author an article with him for the Financial Times. The article said that the Tories are right to go for rapid, big cuts in public spending to reduce Britain's Budget deficit, rather than a slower approach which includes waiting and seeing whether future growth will erode the debt more painlessly. The European Commission gave Osborne...

Back in January, John McFall, a mainstream New Labour MP and chair of Parliament's Treasury select committee, called for the complete nationalisation of Lloyds Bank and the Royal Bank of Scotland. It's a pity he didn't stick to that, and that unions and others in the labour movement did not take up the call, extend it, and force the Government to nationalise the whole finance sector with minimal compensation. Instead, the Government went for pumping taxpayers' money into the banks to help them scrape through the crisis and come out of it as much as they went in - as private-profit machines...